Introduction
Cambodia’s financial sector is rapidly growing and open to foreign investors, but launching a bank or cryptocurrency service requires navigating strict regulations. As an American citizen aiming to offer Bitcoin-related services in Cambodia, you must comply with banking laws, new crypto regulations, and licensing by Cambodian authorities. This guide provides a comprehensive overview of the legal steps, requirements, and recent changes in Cambodia’s financial regulations. We cover foreign ownership rules, licensing categories (from commercial banks to crypto exchanges), capital and documentation needs, regulatory bodies involved, cryptocurrency restrictions, tax considerations, and advice on engaging professional advisors. All information is drawn from official sources and recent regulatory updates to ensure accuracy.
Regulatory Framework and Key Authorities
National Bank of Cambodia (NBC): Cambodia’s central bank is the primary regulator for banks, financial institutions, and now certain crypto services . The NBC has exclusive authority to license and supervise banks, microfinance institutions, payment service providers, and related entities . It issues Prakas (regulations) and guidelines, and enforces compliance with banking laws. Any entity conducting core banking activities – taking deposits, lending, or payment services – must be licensed by NBC .
Securities and Exchange Regulator of Cambodia (SERC): (formerly the SECC) Oversees the securities market and has begun handling digital asset exchanges via a fintech regulatory sandbox. While NBC regulates most aspects of cryptoassets now, SERC’s sandbox program has allowed limited crypto trading under close supervision . In 2023, SERC even signed an MoU with Binance to develop a regulatory framework for digital assets, leading to the launch of Cambodia’s first licensed digital asset exchange in early 2024 under SERC oversight . However, until a dedicated digital asset law is in place, SERC’s role is mainly for pilot programs and any crypto deemed as securities.
Other Relevant Authorities: The Ministry of Commerce (MOC) handles business incorporation (company registration) for all sectors. The General Department of Taxation (GDT) oversees tax compliance for businesses. Cambodia’s Financial Intelligence Unit (CAFIU, under NBC) enforces anti-money-laundering (AML) laws in the financial sector . Additionally, the Telecommunication Regulator of Cambodia (TRC) has taken action against unlicensed foreign crypto platforms by blocking access to those websites , reflecting a coordinated approach to enforce crypto regulations.
Foreign Ownership and Incorporation
Foreign Ownership: Cambodia imposes no restrictions on foreign ownership in the banking and finance sector. Foreigners (individuals or corporations) may own 100% of a local bank or financial institution . There is no local partner or local shareholding requirement – many Cambodian banks are wholly or majority foreign-owned. Similarly, non-citizens can be directors or senior managers of financial institutions; there are no nationality requirements for board members . This favorable investment climate means an American entrepreneur can legally own and operate a bank, microfinance institution, or crypto service provider in Cambodia, subject to licensing.
Business Entity and Registration: To start operations, you must establish a local company. Banks are generally set up as a Public Limited Company (PLC), while other financial businesses (e.g. payment providers or crypto startups) can use a standard Private Limited Company structure . The incorporation process involves:
• Name Reservation: Reserve the company name online with the MOC (takes ~1–3 days) .
• Company Registration: Submit the Articles of Incorporation, shareholder passports, and other incorporation documents to the MOC. The minimum registered capital for a basic company is 4 million riel (around USD $1,000) by law , though regulatory licenses will require far higher capital (detailed below).
• Licensing: After incorporation, apply to the relevant regulator (NBC or SERC) for the specific financial license. NBC requires an in-principle approval before full licensing . (See “Licensing Requirements” section for details.)
• Local Office and Staff: A physical office in Cambodia is required for a banking license . Key personnel (board members, CEO, compliance officers) must meet “fit and proper” criteria (finance experience, clean criminal record, etc.) . While all staff can be foreign, note that labor law limits foreign employees to 10% of the workforce (higher ratios possible with special approval) . Foreign directors or employees operating in Cambodia will need business visas and work permits as well .
Licensing Categories and Requirements
Cambodia’s law recognizes several types of financial institution licenses, each with specific capital requirements and allowed activities. You should choose a license that fits the scope of your Bitcoin-related services. Below are the main categories:
1. Commercial Bank License
A commercial bank license allows full-service banking – accepting public deposits, lending, international transfers, and other financial services . This is the most comprehensive (and most heavily regulated) license. Key requirements include:
• Regulator: NBC (Central Bank) .
• Minimum Capital: USD $75 million paid-up capital (for a locally incorporated bank) . If the bank is a branch of a well-rated foreign bank, a lower capital of $50 million may apply . This huge capital requirement reflects NBC’s 2016 reforms to strengthen bank stability.
• Ownership: No Cambodian ownership required – 100% foreign-owned banks are allowed . The shareholder (individual or corporate) should have a strong financial background or banking experience .
• Management Fit and Proper: Must appoint a qualified board and senior management team with banking/finance experience and clean records . NBC vets the CVs and police clearances of directors and CEO.
• Business Plan: A detailed 3-year business plan is required, covering target markets, proposed services (loans, accounts, payments, etc.), financial projections, and how the bank will contribute to Cambodia’s banking sector . NBC expects a feasibility study and risk analysis in this plan.
• Application Process: First, form the company (PLC), then apply to NBC for “approval-in-principle” to form a bank . The application entails an NBC form plus supporting documents: corporate charter, meeting minutes, business plan, financial statements of shareholders, proof of capital, and more . NBC’s review can take around 3 months for in-principle approval . Once conditions in the in-principle approval are met (e.g. depositing the capital, hiring key staff, installing IT systems), NBC issues the final banking license. The total time to license is roughly 6 months . Operating without a banking license is criminal – penalties include fines up to ~$75 million .
• Regulatory Compliance: Licensed banks must comply with ongoing NBC regulations: maintaining capital adequacy ratios, liquidity ratios, submitting regular reports, and adhering to Cambodia’s AML/CFT laws . Banks are subject to periodic NBC inspections.
Bitcoin relevance: A commercial bank license would allow the broadest range of services (e.g. holding customer deposits in dollars or riel that could be used to buy Bitcoin). However, note that NBC currently prohibits banks from dealing in unbacked cryptocurrencies like Bitcoin directly . A bank could potentially partner with licensed crypto exchanges or offer custodial services for tokenized assets, but it cannot trade or facilitate Bitcoin transactions for customers under current rules (see Crypto Regulations below). If your vision is a “crypto-bank,” be aware of these limitations – you might need both a banking license and a separate crypto license (CASP) or partnership to handle actual Bitcoin services.
2. Specialized Bank License
A specialized bank is a financial institution that conducts only a limited scope of banking activity (one of the three core banking functions: lending, deposits, or payments) . In practice, most specialized banks in Cambodia focus on credit services (loans) and do not take retail deposits . Key points:
• Regulator: NBC.
• Minimum Capital: USD $15 million . (This was raised from earlier levels to $15M after regulatory changes, aligning with NBC’s capital reforms.)
• Allowed Activities: A specialized bank can engage in one of the main banking operations – e.g. extend credit only, or take deposits only, etc. . Current NBC policy does not allow specialized banks to take unrestricted public deposits , so they usually function as lending institutions (for example, a housing loan bank or an agriculture development bank). They cannot offer the full suite of services a commercial bank can.
• Use Case: If your goal is primarily to offer loans or financing (perhaps using crypto as collateral or to fintech borrowers), a specialized bank license could suffice at lower capital than a full bank. However, it would not permit you to accept deposits in exchange for crypto sales, which might limit a crypto trading business model.
• Other Requirements: Similar fit-and-proper management and NBC approval process as a commercial bank (though the review might focus on your specific business line). Foreign ownership is fully allowed, same as for commercial banks.
In summary, a specialized bank is easier to capitalize but narrower in scope. It may not be ideal if you need to both hold client money and trade crypto. Many foreign fintech investors instead opt for a Payment Institution license (below) for payment-related crypto services.
3. Microfinance Institution (MFI) License
MFIs cater to micro-loans and financial inclusion for low-income populations. There are two types: Microfinance Deposit-Taking Institutions (MDIs) which can take limited deposits, and Non-Deposit-Taking MFIs which only lend. Key requirements:
• Regulator: NBC.
• Minimum Capital: For a deposit-taking MDI, KHR 120 billion (about $30 million) is required . For a non-deposit MFI, KHR 6 billion (about $1.5 million) is required . These thresholds were set by a 2016 NBC Prakas to strengthen the sector. (Notably, NBC has since stopped issuing new MDI licenses to encourage existing MFIs to either consolidate or convert to banks .)
• Scope: MFIs can provide micro-credit and other services to individuals, farmers, small businesses, typically with smaller loan sizes. MDIs (if licensed) can collect savings deposits from the public on a limited basis to fund their lending, whereas non-deposit MFIs rely on other funding sources.
• Use Case: An MFI license is generally not suitable for crypto services, as it’s aimed at development finance and micro-loans. If you intended to offer Bitcoin-related micro-loans or education in rural areas, you’d still face the issue that crypto activities fall outside traditional microfinance scope and would need separate approval. Most crypto businesses will choose a different license category.
4. Payment Service Provider / Payment Institution License
For fintech ventures not seeking to operate as a bank, Cambodia offers a Payment Transactions Service Provider license (often just called Payment Service Institution). This is commonly used by e-wallet apps, money transfer services, and payment processors (e.g. Wing, TrueMoney in Cambodia). It allows handling customer funds for payment purposes without being a bank. Key details:
• Regulator: NBC (via the Payment Systems department).
• Minimum Capital: 8,000 million riel (approximately $2 million in cash) . Additionally, 5% of this capital must be deposited with NBC as a guarantee .
• Permitted Services: As per Article 6–7 of the Prakas, a licensed payment service provider can: facilitate cash deposits and withdrawals into customer e-wallet accounts, execute money transfers and remittances, process payments (including mobile payments), issue electronic money (digital stored-value), act as a money changer, and even extend short-term credit related to payment services . Essentially, this license covers operating an e-wallet or payment platform. However, any customer funds held are not legally “deposits” (meaning the provider cannot use them for lending or pay interest) . The float must be safeguarded.
• License Term: The license is granted for 5–6 years and is renewable . Annual fees and application fees are relatively modest (on the order of a few thousand USD) .
• Compliance: Payment institutions must follow consumer protection rules and AML/KYC requirements similar to banks, given they handle customer money. NBC approval is required for major changes (mergers, business transfers, etc.) .
Relevance to Crypto: A Payment Institution license could be very useful for a crypto service provider. For example, if you plan to run a crypto exchange or wallet, you will need to handle customers’ fiat money (riel or dollars) when they buy or sell Bitcoin. This license would legally allow you to hold customer fiat balances, execute money transfers, and integrate with banks for payment rails. Many crypto platforms in other countries operate as licensed payment or e-money institutions to manage user fiat funds. In Cambodia, you would still need the separate crypto-related approval (see next section), but having a payment service license from NBC would likely be a prerequisite to run a crypto exchange that deals in local currency. Capital ($2M) and requirements are far lower than for a bank, making it a more practical starting point.
5. Cryptoasset Service Provider (CASP) License
As of late 2024, Cambodia has introduced a formal licensing regime for crypto businesses. NBC issued Prakas No. B7-024-735 on Transactions Related to Cryptoassets (effective 26 Dec 2024) to regulate cryptoasset activities . This new rule creates the category of Cryptoasset Service Providers (CASPs) and lays out what is permitted and forbidden. Here’s what a foreign entrepreneur needs to know:
• Regulator: NBC is the licensing authority for CASPs . (SERC’s sandbox still exists but ultimately crypto exchanges will need NBC licenses unless classified as securities platforms.) The Prakas applies to all commercial banks and licensed payment institutions as well, in how they engage with crypto .
• Scope of CASP Services: CASPs are defined as any legal entity providing cryptoasset services on behalf of customers, including (a) exchanging crypto for official currency or other crypto, (b) crypto transfer services, or (c) custody and administration of cryptoassets . In other words, exchanges, brokers, wallet custodians all fall under CASP. If you want to operate a Bitcoin exchange or custodial wallet service, you will be a CASP.
• Licensing Requirement: Any entity wishing to offer such services must obtain a license from NBC before operating . Operating unlicensed is prohibited (continuing Cambodia’s stance since 2018 that unlicensed crypto business is illegal ). The new framework legalizes crypto businesses provided they are approved and supervised.
• Cryptoasset Classifications: The regulation divides cryptoassets into two groups :
• Group 1: Tokenized traditional assets (e.g. digital bonds, tokenized stocks) and fully-backed stablecoins that have a stabilisation mechanism and oversight . These are seen as lower-risk and akin to existing financial instruments. Group 1a are tokenized securities; Group 1b are asset-backed stablecoins .
• Group 2: All other cryptoassets – notably unbacked cryptocurrencies like Bitcoin, Ethereum, or algorithmic tokens . These are considered higher risk.
• Limits for Banks: Commercial banks may engage with Group 1 cryptoassets (tokenized assets, stablecoins) if they obtain prior NBC approval, but even then their exposure is capped (Group 1a exposures ≤5% of Tier-1 capital; Group 1b stablecoins ≤3%) . Banks are strictly forbidden from issuing crypto or dealing in Group 2 (unbacked) cryptoassets . In short, banks can’t touch Bitcoin or other typical cryptos on their own balance sheets or services.
• What CASPs Can and Cannot Do: A licensed CASP (which is likely a non-bank company focused on crypto services) will be allowed to facilitate trading and custody of cryptoassets for customers. The exact conditions and procedures for obtaining a CASP license are to be stipulated in a separate regulation in 2025 . This means as of early 2025, you may need to await further NBC guidelines on the application process, required capital for CASPs, etc. However, the Prakas already sets conduct rules for CASPs:
• CASPs must not use customer crypto assets for their own account (no proprietary trading with client assets) .
• CASPs cannot promote or advertise specific cryptoassets or encourage their use as payment for goods/services . (Advertising your platform is fine, but you can’t run ads like “Buy BTC – safest currency!” or facilitate merchants to accept crypto directly.) This aligns with the government’s stance that crypto is not legal tender and should not displace the riel.
• CASPs should likely implement strong internal controls, cybersecurity measures, and segregate client funds, although these details will be clearer with the forthcoming guidelines.
• Penalties: Non-compliance is met with hefty fines – up to KHR 500 million (~$125k) per violation for CASPs, plus possible daily fines for reporting failures . NBC can also suspend or revoke licenses under the banking law penalties .
• Interim Path via SERC Sandbox: Because NBC’s CASP licensing details are pending, a new crypto venture might initially seek SERC’s FinTech Sandbox for a temporary approval. As noted, two local exchanges are operating under the SERC sandbox with restricted scope . These sandbox licenses allow trading of certain cryptoassets under close monitoring, but, for example, they had limitations on converting crypto to the Cambodian riel . The sandbox is essentially a pilot environment; participants must report to SERC and abide by any limits set (e.g., SERC must approve which tokens can be listed) . If you are eager to launch a Bitcoin service before NBC’s full CASP regime is live, you could approach SERC about joining the sandbox program. In 2024, SERC demonstrated openness by partnering with Binance and authorizing a couple of firms, indicating a gradual shift from outright ban to a regulated model . In any case, coordination with regulators is critical – you should not launch any crypto trading service without some form of official approval.
In summary, cryptocurrency services are now becoming legal in Cambodia but under a tightly controlled framework. A foreign-owned company can obtain a license to run a crypto exchange or custody service (CASP) from NBC, once the application process opens . Until then, working within SERC’s sandbox or partnering with an approved entity might be the way to proceed. Always ensure your crypto business plan aligns with what is permitted: tokenized assets and stablecoins have official support, while pure Bitcoin-centric services will be scrutinized and cannot involve banks or payment in shops.
Step-by-Step Process to Establish the Business
Combining the above pieces, here is an outline of the steps to start your financial/crypto entity in Cambodia as a foreigner:
1. Incorporate a Cambodian Company: Register your company with the Ministry of Commerce. Decide on the entity type (most fintech startups use a Private Limited Company, whereas a bank must be a Public Limited Company). Prepare the required documents (passport copies, Articles of Association, registered office address, etc.) . Use the online Business Registration platform to reserve a name and file incorporation forms . Upon approval, you’ll receive a Certificate of Incorporation. This company will be the vehicle to apply for financial licenses.
2. Raise/Allocate the Required Capital: Ensure you have sufficient paid-up capital to meet the license requirement. For example, deposit $75M into the company’s bank account if applying for a commercial bank license , or $2M if applying for a payment service provider license . You will need bank letters or financial audits evidencing this capital for the license application. (Note: The capital must be in Cambodian Riel or USD equivalent and sourced legitimately – expect NBC to ask for proof of fund sources as part of their due diligence on shareholders.)
3. Prepare the License Application Dossier: Each license has specific documentation requirements. Generally, you will need:
• Application form (NBC has standard forms for bank or payment institution licenses).
• Business Plan and Financial Projections (covering at least 3 years) , detailing the services you will offer (e.g. Bitcoin exchange platform, or crypto custody, or lending products), the market strategy, risk management, and how you will comply with regulations.
• Corporate Governance documents – Articles of Association, internal policies (especially for risk, AML, IT security for a crypto platform).
• Shareholder information – IDs/passports of owners, details on their financial background, possibly bank references. Major shareholders ( >20% stake, called “influential shareholders”) must demonstrate financial soundness; NBC may require credit reports or increased capital if needed .
• Fit-and-Proper documents for Directors/Managers – CVs, diplomas, work reference letters, and police clearance certificates (showing no criminal record) for each director, CEO, and senior manager . If a person has lived in Cambodia, a local police report is needed; otherwise a report from their home country suffices.
• Audited financial statements or net-worth statements of shareholders (to prove they have the means to invest the required capital).
• Draft customer forms or agreements (for example, terms of service for your crypto exchange, showing disclosure of risks to customers). NBC might not ask at initial application, but having these ready shows preparedness.
For a CASP (crypto service) license specifically, until NBC issues the detailed Prakas on CASP licensing, you might prepare a proposal referencing the December 2024 Prakas to demonstrate how you will comply (e.g. you will not promote crypto as payments, you will implement strict KYC, etc.). Engaging in early dialogue with NBC can be helpful given the novelty.
4. Submit Application and Obtain In-Principle Approval: Submit the completed dossier to the NBC’s Licensing Department (or to SERC for a sandbox application). NBC will review the application thoroughly – this can involve follow-up questions or meetings. If NBC is satisfied, they will issue an “Approval in Principle” (AIP) letter for your license . The AIP will list conditions to fulfill (for example: inject the full capital into a local bank account, hire certain key personnel, install required IT systems, etc.) . For a crypto business, one condition might be obtaining any necessary technical clearance from NBC’s IT department or confirming interoperability with the Bakong system (speculative, as new rules evolve). The AIP is not yet a full license, but it is the major green light.
5. Fulfill Licensing Conditions: Once you have the in-principle approval, you typically have a certain timeframe (e.g. 6 months) to meet all the conditions. This may include: depositing the capital at NBC or an approved bank (sometimes NBC requires that capital funds be “locked” in a fixed deposit during initial years), setting up your office and core systems, recruiting staff, and any testing of your platform. NBC may conduct an inspection or ask for evidence (e.g. a lease for your office, an installed banking software or trading platform, etc.).
6. Obtain Final License: After you report fulfilling all conditions, NBC will issue the operating license. Your company will then be listed as a licensed institution in the NBC’s registry or gazette . For a bank, you can then commence banking operations. For a CASP/crypto provider, you can launch your exchange or service to the public (subject to any restrictions in your license). Make sure to also obtain any ancillary approvals (for instance, if you plan to offer cross-border remittances, you might need a separate NBC nod for international partnerships).
7. Post-Licensing Compliance Setup: Once operational, ensure robust compliance:
• Register with Tax Department: Obtain a tax identification number and the annual “Patent Tax” certificate (basic business license from GDT).
• Implement AML/CFT Program: As a financial institution or CASP, you must comply with the Law on Anti-Money Laundering and Combating the Financing of Terrorism . This means conducting KYC on all customers, monitoring transactions (especially crypto transactions for any suspicious patterns), and reporting any large or suspicious transactions to the Cambodian FIU. Staff should be trained on AML, and systems should be in place to screen for sanctions or illicit activities. Given the high risk of crypto for money laundering, NBC will expect stringent compliance from day one.
• Consumer Protection and Conduct: Adhere to any banking code of conduct or fintech guidelines. In 2022 Cambodia introduced a code of conduct for banks to ensure transparency and fair treatment of customers – these principles likely apply to fintech services too. All fees, charges, and risks should be clearly disclosed to users of your Bitcoin service.
• Reporting: Prepare to file regular reports to NBC (monthly/quarterly financial statements, for banks and payment institutions) and any specialized cryptoasset exposure reports. Under the new crypto rules, banks must file quarterly reports of their cryptoasset exposures ; CASPs might similarly have to report volumes of crypto transacted, etc. Be ready to comply with any reporting format NBC provides.
Throughout the setup process, it’s advisable to maintain open communication with regulators. NBC in particular often prefers ongoing dialogue – responding promptly to requests and perhaps providing demos of your platform to assure them of security measures can build trust and smooth the approval.
Cryptocurrency Regulations and Restrictions
Cambodia’s official stance on cryptocurrency has evolved from a near-ban to a cautiously regulated allowance. Understanding these rules is vital for your Bitcoin-focused venture:
• Not Legal Tender: The National Bank of Cambodia has made it clear that cryptocurrencies are not recognized as legal currency in Cambodia . The Cambodian riel remains the only legal tender (with the US dollar widely used in practice). You cannot advertise Bitcoin as an alternative currency for everyday transactions in Cambodia. Any attempt to use crypto in lieu of money could be deemed illegal or at least not enforceable under law.
• 2018 Joint Ban Statement: In 2018, the NBC, SERC, and National Police issued a joint statement effectively prohibiting buying, selling, or trading cryptocurrencies without proper authorization . At that time, no agency was granting such authorization, so it served as a de facto ban on crypto exchanges, ICOs, and the like. This statement warned the public of risks and stated that operating crypto businesses without license was against the law. Many crypto-related operations went underground or paused as a result.
• Crackdown on Unlicensed Platforms: Enforcement stepped up in late 2024 when the Telecommunication Regulator (TRC) blocked access to 16 overseas crypto exchange websites (reportedly including big names) that were operating in Cambodia without local licenses . This move signaled that authorities are serious about forcing crypto activity through regulated channels only. As an operator, you cannot rely on the “gray area” – you must either get licensed in Cambodia or risk being shut down.
• New 2024/25 Regulatory Framework: The biggest change is the December 2024 Prakas on Cryptoassets by NBC, discussed earlier. This now provides a legal pathway for crypto services under NBC’s oversight, while still banning certain activities:
• Banks: No direct dealing in Group 2 crypto (unbacked coins) – meaning your bank (if you start one) cannot, for instance, offer Bitcoin trading in its mobile app or hold Bitcoin in treasury. Banks can work with tokenized assets/stablecoins with permission, but within strict exposure limits .
• CASPs: Crypto exchanges/custodians are allowed under license, but crypto-based payments are disallowed. Your platform should not function as a payment processor for goods in crypto. (For example, you shouldn’t enable a feature for users to pay Cambodian merchants directly in Bitcoin – that would contravene the policy of not promoting crypto as a substitute for the riel .) The focus should be on investment/trading and custody services.
• Advertising: As noted, marketing must be responsible – you can promote your exchange service, but you cannot tout specific cryptoassets as investments or encourage the public to convert their salaries into crypto, etc. .
• Issuing Tokens: It is prohibited to issue your own cryptoasset (no ICOs or launching a new coin in Cambodia) and Group 2 tokens cannot be created by any entity in Cambodia . If your business model involved launching a new token, you would need to reconsider or seek special approval possibly via SERC if it’s a security token.
• Bakong and State Digital Initiatives: Cambodia launched “Bakong” in 2020, which is a blockchain-based interbank payment system often described as a quasi-CBDC (Central Bank Digital Currency) . Bakong is essentially a digital wallet system managed by NBC that links to users’ bank accounts and allows instant mobile payments in riel or dollar. It has been hugely successful domestically, reaching millions of users . Why this matters: The Cambodian government views Bakong and similar fintech as the preferred digital payment route, and sees privately-run cryptocurrencies as potentially undermining the riel and financial stability . Thus, any crypto service you offer will be measured against goals of financial inclusion, currency stability, and state oversight. Aligning your service with these goals (e.g. perhaps integrating Bakong for fiat side payments, or targeting remittances which help Cambodians) could make regulators more receptive.
• Financial Crime Compliance: Cryptocurrency services face global scrutiny for money laundering and fraud. Cambodia, in particular, has had issues with online gambling and financial scams in recent years. As a result, any crypto business will be expected to implement extensive compliance checks. Customer due diligence (KYC) is mandatory for all customers – verifying identities with passports/IDs, monitoring transactions, and keeping records. Suspicious or large transactions (e.g. a trade of Bitcoin that seems to involve illicit funds) must be reported to the Cambodia FIU under the AML/CFT regulations . Failure to have a strong compliance program could lead to license revocation or sanctions.
• Taxation of Crypto Transactions: Currently, Cambodia does not have a specific crypto tax law. However, recent guidance indicates that profits from cryptocurrency trading are subject to standard income tax . The corporate income tax is 20%, and the GDT views gains from crypto sales as taxable income at the same 20% rate . (Cambodia has been planning a general capital gains tax regime, but its status is evolving .) There is no VAT on the sale of cryptocurrencies at present (financial services are generally VAT-exempt), but if your business provides services for a fee (trading fees, commissions), those fees could be seen as financial service fees, likely exempt from VAT as well. Nonetheless, keep detailed records of all transactions to properly calculate any taxable profits and comply with any future tax guidelines. Engaging a tax advisor is wise, since the GDT may issue new rules as the crypto industry formalizes.
In short, Cambodia allows foreigners to operate crypto services now, but under very careful regulation. You must play by the rules: get licensed, only offer approved activities, emphasize security and compliance, and pay taxes on your earnings. The landscape is changing quickly – always stay updated on NBC and SERC announcements for new directives that might affect your operations.
Tax and Compliance Considerations
Corporate Tax: Standard corporate income tax in Cambodia is 20% of net profit for most sectors . A company running financial or crypto services will fall under this 20% regime (there are higher rates for certain industries like oil/gas, but not for financial services). You will need to file annual tax returns and pay tax on your profits in Cambodia. If you repatriate profits as dividends to the U.S., note that Cambodia imposes a 14% withholding tax on dividends distributed to non-residents (and there is no U.S.-Cambodia tax treaty to reduce this). Plan your corporate structure with this in mind – some investors use a holding company in Singapore or elsewhere for tax optimization, but you should get professional tax advice for your specific situation.
Tax on Crypto Transactions: As mentioned, crypto trading profits are likely taxable. If your entity buys and sells crypto as part of treasury operations or market-making, any realized gains could be considered income. The GDT has not issued detailed crypto tax rules yet, but guidance suggests they view crypto similar to a capital asset – taxable at 20% on gains . There is currently no separate capital gains tax form; such gains would just be part of your profit and loss in the annual return. Be mindful of how you account for crypto inventory and valuation. If you hold Bitcoin on your balance sheet (as a treasury reserve or float), its unrealized gains might not be taxed until sold, but this is an area to confirm with the GDT once you start operations.
Withholding Taxes: If you hire foreign experts or consultants abroad, or pay for software services from overseas providers, certain payments might incur withholding tax (14% on services paid to overseas). Interest payments out of Cambodia (if you, say, borrow from a foreign parent company) also incur withholding tax. However, interest paid by banks to depositors can be exempt in some cases. Since you might be moving money internationally (especially if dealing with crypto liquidity providers), structure your contracts to be tax-efficient.
Other Taxes: Cambodia has an annual Minimum Tax (1% of revenue) which applies if your 20% profit tax is below 1% of gross revenues – financial institutions are usually exempt from minimum tax because they have audited statements, but confirm with tax advisors. There is also a Fringe Benefit Tax (20%) on certain benefits given to employees (housing, cars, etc.), and various payroll taxes – these will apply as you hire staff, but they are manageable (employers contribute ~3% to social security and withhold monthly salary tax on a progressive scale for employees). None of these are unique to financial firms but must be budgeted for.
Compliance and Audit: All banks and financial institutions must be audited annually by an NBC-approved audit firm. For a crypto service provider, NBC may also require annual audits (certainly if you’re a Payment Institution or if/when CASP licenses include that condition). You’ll need to maintain proper accounting records according to Cambodian International Financial Reporting Standards (CIFRS). Cryptoassets accounting can be complex (likely treated as intangible assets or inventory; IFRS has no specific crypto standard yet). Ensure your finance team or external accountant knows how to record crypto transactions properly.
Consumer Protection and Dispute Resolution: Cambodia is enhancing consumer protection in finance. As a service provider, you should establish clear customer support and dispute resolution mechanisms. If a customer has a complaint (e.g. “my withdrawal didn’t arrive” or “my account was hacked”), you need procedures to investigate and resolve it. The NBC or SERC could inquire into customer complaints. Also, make your terms of service compliant with Cambodian law – include governing law as Cambodia and a clause on dispute resolution (some firms choose arbitration under CIAC in Cambodia or courts, etc.). Having a strong customer protection approach will also demonstrate your good faith to regulators.
Data Protection: Cambodia does not yet have a comprehensive data protection law, but handling financial data means you should follow best practices. Customer data and transaction records should be kept confidential and secure. NBC’s regulations on cybersecurity (if any) should be followed. It’s wise to store data on servers in Cambodia or at least ensure NBC has access if needed (especially for a payment service, NBC may require certain data localization or access for supervision).
Strategic Consideration – Qualified Investment Project (QIP): Normally, Cambodia offers foreign investors certain incentives (like tax holidays or duty exemptions) if they register as a QIP with the Council for the Development of Cambodia. However, financial institutions are typically not eligible for tax holidays under the incentive schemes, and given the highly regulated nature, you’re unlikely to get special treatment like a 0% tax holiday. Still, it may be worth consulting if any incentives (perhaps for a tech innovation in fintech) exist – realistically, plan to pay normal taxes.
In summary, compliance is a continuous obligation. Budget for professional accounting and legal compliance services annually. The Cambodian authorities will expect your business to adhere not only to the letter of the law but also to the broader goals of financial integrity, consumer protection, and support of the local economy.
Engaging Legal and Financial Advisors
Setting up a bank or crypto-financial service in Cambodia as a foreigner is complex. It is highly recommended to engage experienced legal and financial advisors to guide you through incorporation, licensing, and compliance. Fortunately, Cambodia has several reputable firms (local and international) that specialize in assisting foreign investors in the banking and fintech sector:
• International Law Firms with Local Offices: Firms like DFDL, VDB Loi, Rajah & Tann Asia, and Tilleke & Gibbins have banking and fintech legal teams in Phnom Penh. They regularly help draft license applications and liaise with NBC. For example, DFDL has published detailed updates on NBC’s crypto regulations and can advise on compliance . VDB Loi has experience obtaining bank licenses for foreign banks (noting the $75M capital and other conditions) . Engaging such a firm can greatly smooth the process – they will ensure your documentation meets local legal standards and will often accompany you in meetings with regulators. Legal fees for a full bank license process are not trivial, but given the high stakes (and NBC’s meticulous scrutiny), it’s a worthwhile investment.
• Local Law Firms: Top Cambodian firms such as Bun & Associates, Sok Siphana & Associates, HBS Law, or BNG Legal are also well-versed in banking law and foreign investment. They can handle everything from company registration to obtaining tax registrations, employment contracts, and real estate leases for your office. Some have former regulators or central bank lawyers in their teams, which can be invaluable for insight.
• Accounting and Tax Advisors: The Big Four accounting firms (PwC, Deloitte, EY, KPMG) and regional consultancies like Violet Consulting or Acclime Cambodia can assist with tax planning, financial projections, and setting up accounting systems compliant with NBC’s reporting formats. For a crypto enterprise, ensuring your accounting of digital assets is transparent will help in both regulatory reporting and audits. Tax advisors can also keep you updated on any new tax rules specific to crypto (an area likely to develop as the government sees more licensed operators).
• Industry Associations: The Association of Banks in Cambodia (ABC) and the Cambodia Fintech Association are platforms where you can network with peers and get informal guidance. As a foreign founder, plugging into these groups can connect you with others who have navigated the process. Sometimes regulators themselves participate in industry workshops through these associations, which can provide clarity on regulatory expectations.
When choosing advisors, look for those with direct experience in licensing. Ask for examples of clients they’ve helped set up banks or payment services. Given that the crypto licensing is brand new, expertise is scarce – but the above firms are actively following these developments (some worked on Cambodia’s first crypto exchange licensing via the sandbox). You might engage a firm to do an initial “regulatory roadmap” memo for you, outlining all steps and estimated timelines, before formally proceeding.
Lastly, maintain a good relationship with the regulators themselves. While you must not bypass official channels, showing respect and willingness to comply goes a long way. In Cambodian business culture, having a local consultant or legal advisor who is fluent in Khmer and understands local protocol can help interpret and convey feedback between you and the government. The goal is to present your venture as bringing value to Cambodia’s economy (innovative services, jobs, financial inclusion) while strictly upholding laws. With the right preparation and professional guidance, foreign entrepreneurs can and do successfully establish financial institutions in Cambodia – your Bitcoin service could be among the pioneering regulated crypto ventures in the Kingdom.
Recent Developments to Watch
The regulatory landscape is still evolving. A few ongoing or expected changes that you should keep an eye on include:
• Detailed CASP Licensing Rules: NBC is expected to release a follow-up Prakas in 2025 detailing the procedure and criteria to license Cryptoasset Service Providers . This will likely specify minimum capital for CASPs, licensing fees, cybersecurity requirements, etc. Monitor NBC’s official announcements – once issued, you should be ready to align your application accordingly (or update your existing operations if you launched via the sandbox).
• Possible Digital Asset Legislation by SERC: Parallel to NBC’s efforts, SERC might push for a comprehensive Digital Assets Law to formally regulate crypto exchanges, ICOs, and security tokens under capital markets rules. In early 2025, analysis indicated SERC’s interest in developing such a framework . A new law could introduce a separate licensing regime or integrate with NBC’s. Keep track of SERC press releases or any public consultation papers on this front.
• Financial Institution Mergers and Capital Increases: Cambodia’s banking sector is quite crowded (50+ banks). NBC has periodically raised capital requirements to encourage consolidation. For instance, as noted, it raised bank capital minimum to $75M in 2016 and MDI to $30M . It’s possible in coming years NBC could further adjust capital or issue new guidelines (e.g., higher capital for CASPs if they grow systemic). Also, NBC stated in 2021 it would stop issuing new MDI licenses , pushing microfinance firms to become either commercial banks or non-deposit MFIs. For your strategy, this means regulators favor well-capitalized players – demonstrating financial strength beyond minimums could be beneficial in the approval process.
• Cambodia’s FATF Status: Cambodia had been on the Financial Action Task Force (FATF) “grey list” for deficiencies in AML controls, though it was making progress. If Cambodia exits the grey list, enforcement on AML might get even stricter as it shows commitment to global standards. Conversely, if issues remain, financial entities face greater scrutiny. Crypto services will be under the microscope to ensure they are not used for money laundering. Ensure your AML program meets not just local, but international best practices.
• Tax Policy Updates: The government may introduce specific tax regulations for crypto assets if the sector grows. This could include guidance on valuing crypto for tax, or even a new tax on crypto trades. Engage tax advisors who are watching for any prakas or guidelines from GDT regarding cryptocurrency. Also, as the Cambodian digital economy grows, new laws on e-commerce, cybersecurity (a Cybercrime Law has been in draft form), and data protection could emerge and impact fintech operations.
In conclusion, starting a financial institution or crypto service in Cambodia is achievable for foreigners, given the country’s liberal investment regime and newly established crypto regulations. It requires substantial preparation, capital commitment, and compliance rigor. By securing the proper licenses (banking, payment, and/or CASP), adhering to all NBC and SERC rules, and seeking guidance from seasoned professionals, you can navigate the process successfully. Cambodia’s market, while smaller than some, is hungry for innovative financial services – your Bitcoin-related venture, if done legally and responsibly, could tap into a growing user base in a frontier market that is modernizing its financial system . Always prioritize legal compliance and build a strong relationship with regulators; this will set the foundation for a sustainable and profitable operation. Good luck with your endeavor, and welcome to Cambodia’s fintech sector!
Sources:
• National Bank of Cambodia – Law on Banking and Financial Institutions and various Prakas (NBC website)
• Cambodia Counsel, Banking & Finance FAQ – foreign ownership and capital requirements
• Open Development Cambodia – report on 2016 NBC capital regulation changes
• VDB Loi, How to Get a Bank License in Cambodia? (2020) – licensing steps and conditions
• Tilleke & Gibbins, Regulations for Foreign Banks in Cambodia (2020) – confirmation of 100% foreign ownership allowance
• SR Law, Prakas on Payment Services Institution (2017) – payment provider license scope and capital
• NBC/SERC Joint Statement (2018) – cryptocurrency activity prohibition (via DFDL update)
• Fintech News Singapore, NBC Introduces Cryptoasset Regulations (Jan 2025)
• DFDL Legal Update, Cryptoassets Regulation by NBC (Jan 2025)
• Eric K. (Attorney), Establishing a Bitcoin Company in Cambodia (2025) – analysis of NBC/SERC crypto framework
• CryptoforInnovation.org, Cambodia’s Crypto Interest and Policy Changes (May 2025)
• Standard Insights, Cryptocurrency in Cambodia: All You Need to Know (2023)
• Khmer Times, NBC’s new cryptoasset regulations – balancing act (2025) – (summarized in text)
• General Department of Taxation guidance (via Eric K. blog) – crypto profits taxed as corporate income .
